2025 Secondaries Year in Review: A $200 Billion Escape Valve Opens Wide

Private markets found their liquidity release valve in 2025. With distributions frozen at post-crisis lows and $2.9 trillion in unsold assets choking the system, the secondary market exploded to over $200 billion in annual volume—transforming from a niche corner of private equity into essential infrastructure for the entire industry.

As KKR Partner Alisa Wood put it bluntly: "You can't eat IRR. You actually need capital coming back."

The Big PictureThe secondary market is no longer optional. It's the primary mechanism keeping private markets functional during the worst exit drought in 16 years.

H1 2025 alone saw $103 billion in transaction volume—a 51% increase from the same period last year—setting a new six-month record. According to StepStone Group, the market is on pace to exceed $210 billion for the full year, up from $162 billion in 2024 and roughly triple the market five years ago.

What changed? Everything else stopped working. IPO markets remain effectively closed. Strategic M&A stayed subdued through Q3. And with 61% of buyout-backed companies now held over four years—the longest holding periods in two decades—GPs and LPs alike have turned to secondaries as their only reliable exit path.

Distributions to LPs fell to just 11% of NAV in 2024—a level not seen since the 2008 financial crisis—despite the absence of a recession. As Liz Campbell, CIO of Portfolio Advisors, put it: "Everybody's saying that DPI is the new IRR." The DPI crisis in private equity has now spilled into credit markets, driving investor need for portfolio rebalancing solutions across asset classes.

The Numbers That Matter

The 5 Stories That Defined 2025

1. Continuation Vehicles Became the Fourth Exit

What happened: Vista Equity Partners closed a record $5.6 billion single-asset continuation vehicle for Cloud Software Group in June, offering existing investors a 4.1x multiple if they chose liquidity over rollover. New Mountain Capital followed with a $3 billion multi-asset CV for Real Chemistry. According to PitchBook, GP-led transaction counts surged from 16 deals in 2020 to 89 in 2024—with 2025 on pace to shatter that record. Total GP-led volume hit $47 billion in H1 2025 alone—up 72% year-over-year.

Why it matters: Continuation vehicles now account for 13-20% of all PE exits, with CVs comprising 84% of GP-led secondary volume. PitchBook projects GP-led secondaries could reach $105 billion by 2028 under a bull case scenario. The secondary market overall is projected to grow to $700 billion by 2028. When GPs can reset carry, retain control, and offer LPs liquidity without selling to a competitor—why would they ever do a traditional sponsor-to-sponsor deal again?

The tension: 75% of LPs view continuation funds as creating problematic conflicts of interest. About one-third of GP-led transactions still fail due to LP resistance over valuation transparency. The SEC's rule requiring third-party fairness opinions was struck down in 2024, but governance scrutiny hasn't subsided.

2. Credit Secondaries Hit an Inflection Point

What happened: Credit secondaries transaction volume surged from $6 billion in 2023 to an expected $17+ billion in 2025—a 70%+ compound annual growth rate. GP-led deals are now expected to account for more than 70% of credit secondary transaction volume in 2025, a dramatic shift from the 38% GP-led share in 2024. Pantheon alone deployed in the first six months of 2025 everything they invested in all of 2024.

Why it matters: With private credit crossing $2 trillion in AUM and over 1,200 managers globally, the conditions that created the PE secondaries market are now present in credit. As Pantheon's Rick Jain explained: "It's a little bit like Field of Dreams—if you've built it they will come, because now you've created the capability, the capital, the right cost of capital to facilitate liquidity transactions."

Coller Capital's Michael Schad is even more bullish: "In the long very long term private credit secondaries could be bigger than private equity secondaries." Asked about market trajectory, he predicted: "Can this market be at 50 billion in 3 to 5 years? Yes I think so."

The opportunity: GP-led direct lending portfolio transactions are pricing at 95-100% of NAV, reflecting strong investor demand and over $20 billion in dedicated dry powder. For buyers, the asset class offers shorter duration, faster cash flows, and lower return multiples—making it particularly suited for perpetual fund structures.

The fundraising boom:

• Coller Capital: $6.8 billion (nearly 5x its $1.4B debut fund)

• Pantheon Credit Secondaries: $5.2 billion

• Ares Credit Secondaries: $3.5 billion+ (inaugural fund)

• Benefit Street Partners: $2.3 billion

3. The Megafund Arms Race Intensified

What happened: Apollo closed its debut secondaries fund at $5.4 billion in May, bringing its S3 platform to nearly $10 billion in total capital since launching in August 2022. This follows record fundraises from Ardian ($30 billion—the largest secondaries fund ever raised), Blackstone ($25 billion), Lexington Partners ($26 billion), and HarbourVest ($15 billion). Blackstone also closed the world's largest dedicated infrastructure secondaries fund at $5.5 billion.

Ardian's success reflects the structural shift in seller composition. As Executive Vice-President Vladimir Colas noted: "Liquidity having been slower for LPs, that brought a lot of first-time sellers to the market." The firm has already deployed half its $30 billion fund across 17 transactions averaging $2 billion each.

Why it matters: Dedicated secondary capital reached a record $288 billion in available capital, with more than 10 new evergreen retail vehicles planned for 2025. But deal flow is outpacing capital—dry powder supports only about 1.3 years of transaction volume at current pace, versus 4.5 years for traditional PE. The market remains structurally undercapitalized despite record fundraising.

The innovation: Apollo's platform exemplifies the evolution—offering not just LP stake purchases and GP-led transactions, but NAV loans, GP lending, staking, and hybrid solutions across asset classes. As Apollo Co-President Scott Kleinman noted: "The provision of liquidity solutions in a variety of formats to both sponsors and LP investors is an increasingly important part of the financial ecosystem."

4. Retail Capital Reshaped the Buyer Base

What happened: Evergreen private equity vehicles are rapidly deploying capital into secondary markets, with Hamilton Lane's two vehicles raising over $9 billion (half invested in secondaries) and StepStone's $4.3 billion vehicle deploying 80% into secondaries. '40 Act funds and evergreen retail vehicles now account for nearly one-third of secondary market fundraising.

Why it matters: Retail capital is intensifying competition and driving higher pricing. As Campbell Lutyens' Immanuel Rubin explained: "Unless you deploy [the cash] quickly it can create a drag on your returns." This urgency leads retail funds to pay approximately 4% more than traditional buyers for secondary stakes.

As Hamilton Lane's Hartley Rogers observed: "I think the retail investors are seeing some of the best deals right now because the institutional investors are a little bit frozen."

The implication: With over 10 new evergreen vehicles planned for 2025 and Trump's August executive order opening the $12.5 trillion defined contribution market to alternatives, the retail wave is just beginning. The secondary market evolution from niche trading venue to mainstream liquidity solution continues to accelerate.

5. NAV Loans Emerged as the Silent Partner

What happened: According to S&P Global, the $150 billion NAV loan market is expected to double within two years. Bain found that 30% of companies in buyout portfolios have already undergone some liquidity event—totaling $410 billion through minority interests, dividend recaps, NAV loans, and secondaries combined.

Why it matters: NAV lending has evolved from a crisis tool to a core financing solution. GPs use it to fund add-on acquisitions, generate distributions without selling, and fully invest LP commitments by bridging the gap between fees and deployable capital. Major banks (Goldman, JPMorgan, Macquarie) compete with specialists (HPS, 17Capital, Ares) across the risk spectrum.

The convergence: NAV lending and secondaries are increasingly intertwined. Secondary buyers use NAV financing to enhance purchasing power. GPs structure continuation vehicles with embedded NAV facilities. Large pension funds are increasingly borrowing against their private equity portfolios through NAV loans to raise cash without fire-selling assets—with the largest loans reaching around $800 million and expected to eclipse $1 billion soon.

Key Deals and Fundraises

Beyond traditional PE: Infrastructure secondaries skyrocketed to $46 billion in 2023, up from $14 billion in 2020, with Evercore projecting $70 billion by 2028. VC secondaries topped $50 billion as the liquidity drought persisted. Real estate secondaries are seeing valuations bottom out, creating attractive entry points. Portfolio management—not distress—now drives the majority of transactions across all asset classes.

The Tensions Beneath the Surface

LP frustration is building. Larger allocators report being unable to underwrite GP-led deals in the short timeframes required by sponsors. Some feel shut out of continuation vehicles—particularly when assets move earlier in a fund's life, costing them upside in both the original fund and the CV.

Pricing is compressing upside. Average LP portfolio pricing reached 90% of NAV in H1 2025, with buyout funds at 94%. That's approaching 2021 levels. Strong pricing reflects quality, but it also means less margin of safety for buyers.

The market remains a sellers' event. Secondary volume as a percentage of total private capital AUM sits below 1%—compared to 2-3% turnover in more mature markets. Even at $200+ billion, secondaries are solving only a fraction of the $2.9 trillion exit backlog.

Disruption may be coming. Pantheon's Rick Jain warns: "Everything's priced for perfection and there's a lot of risk on and not as much risk off." Current market conditions suggest a negative event within 12 months could create attractive opportunities for prepared buyers.

What's Next

Credit secondaries will accelerate. With <1% turnover on $2+ trillion in private credit AUM, the growth runway is immense. If turnover rates approach PE levels, credit secondaries could exceed $50 billion annually within five years. The advent of GP liquidity solutions allowing managers to create continuation funds around portfolios of 25-100 different credits represents a major structural innovation.

The LP-GP power dynamic is shifting. As secondaries become routine, LPs are revising internal approval processes to roll into continuation vehicles more quickly. Portfolio management now drives 51% of LP secondary sales (up from 33% in 2023), establishing secondaries as a core allocation tool rather than a distress signal.

The shift appears permanent. As Pantheon's Rick Jain put it: "The hounds are out. I don't see them coming back." The trend toward private markets appears irreversible as companies find speed, flexibility, and confidentiality advantages that public markets cannot match.

The Bottom Line

The secondary market's explosion in 2025 isn't a temporary response to a frozen exit environment. It's a structural shift in how private markets operate. Secondaries have evolved from a solution for distressed sellers to essential infrastructure for a $19 trillion industry.

As Alisa Wood of KKR reminded the industry: "If you don't like change, you're going to like irrelevance even less."

The firms that master this toolkit—spanning LP-led transactions, GP-led continuation vehicles, NAV lending, credit secondaries, and hybrid structures—will define the next era of private capital.